Filling hotel beds leads to more city tax revenue, retail shopping

When the new TownePlace Suites and Courtyard by Marriott open soon, Grapevine will have 20 hotels—a key source of out-of-town money that indirectly fills city coffers without emptying residents' pockets.

Those visitors piling out of the shuttles downtown are helping to keep property taxes down.

In 2012, occupancy tax brought in $12.3 million—26 percent of the city budget, but the revenue is restricted in its uses to tourism and the hotel and convention industry.

Even with the restrictions, the hotel money is an economic force citywide.

"It's a proven fact that tourism drives sales tax, which helps keep our general fund healthy and keep our taxes low for residents," said Jennifer Hibbs, assistant city manager.

Grapevine property owners have enjoyed a stable tax rate since 2002, despite the recession of 2008-09. This year and next, they can see tangible evidence of city money put to residents' use with expansion of the community activities center and construction of a new public safety building.

Nearly all the occupancy tax revenue is funneled to the city Convention and Visitors' Bureau, which in turn uses it to generate more tourism and convention business. The CVB gets 92.5 percent of the hotel tax revenue and also brings in its own money to create its annual budget of $18-$20 million, said Paul W. McCallum, executive director of the bureau.

"We generate $8 million of that," he said. "We actually have to be entrepreneurial."

Imagining the city's future

The decision to make Grapevine a tourism town started about 25 years ago, when McCallum was first hired by the city, he said.

"They could have focused on light industry, freight or assembly," he said.

But the amount of land was limited, and industry could only bring in so many jobs. The tax stream also would be finite.

"But if you build hotels, you create a lot of jobs, and they fill up every night, spend money and leave," McCallum said.

The city had a lot of work to do.

McCallum said downtown was not restored to its historical glory as it is now. Most of the buildings had aluminum fronts, he said.

"We began the process of pulling the aluminum off and exposing the buildings."

Then city leaders started to focus on the history and heritage of the city, which began in 1844 and became a railroad stop in 1888. Even the depot and section house had been moved.

"We began to put Humpty Dumpty back together again," McCallum said.

The key to making it work was the residents, he said.

"The brand has to be believed by the people that live here," he said.

McCallum also credits the long tenures of City Council members. Voters defeated a city charter amendment this year that would have limited terms.

He sees the unchanging council as a plus.

"That way they don't chase every butterfly that comes along," he said.

Festivals, railroad

The biggest part of the bureau's revenue after hotel tax comes from festivals such as GrapeFest and Main Street Days. The CVB dedicates five full-time employees to festivals and events.

Attendance was lower the last few years with the double whammy of the recession and the DFW Connector construction, which started in 2010, McCallum said.

But, he added, this year's GrapeFest was "the first time since 2008 people felt comfortable to really eat and drink what they wanted to."

"People's confidence is back. We're thinking 2014 is going to be great," he said.

The 2014 budget estimates revenues from festivals and the New Vintage Wine Trail at $3.3 million.

Another $1.7 million is expected to come from Vintage Railroad operations, which employs five people fulltime and seven parttime.

The bureau also oversees the city's historic preservation and heritage offices and programs, and budgets some money for arts-related items.

The state dictates how occupancy tax must be spent, chiefly saying it must directly benefit tourism and the convention and hotel industry.

Conventions

With hotels such as Great Wolf Lodge and the Gaylord Texan Resort and Convention Center Hotel, as well as attractions such as Legoland at Grapevine Mills mall, the city is a family travel destination.

Both the big hotels have tax incentive agreements that helped bring them here McCallum said.

But the ongoing money is in conventions, he said, because they fill the hotels.

The city competes in a market that includes Las Vegas, whose convention and visitors budget is $280 million.

"It's been very hard during the downturned economy," he said. "You still get in the arena, but you're not coming out alive."

The city offers incentives such as hosting luncheons at the close of conventions, which McCallum said can cost a couple hundred thousand dollars.

The largest convention in Grapevine was the 2004 Honda Goldwing Road Riders Association, which brought in 12,800 motorcyclists and others, he said.

McCallum estimated the bureau spends 12 percent on incentives.

Sarah Moran, a Marriott spokeswoman, said the 120-suite TowneSuites and the 181-room Courtyard by Marriott are scheduled to open by December this year. She said the opening date is not definite.

The two will share a full fitness center, patio and resort-style outdoor pool, said Moran via email.

The suites will have full kitchens with refrigerators, dishwashers and cook tops. The Courtyard side will have more than 12,000 square feet of meeting space.

The starting room rate for both will be $209/night, Moran said.